Econ: Economics and Supply Curve Essay

A horizontal or a perfectly elastic, demand curve. A perfectly competitive firm is called a price taker because that firm must “take,” or accept, the market price- as in “take it or leave it.”

2. Explain the different options a firm has to minimize losses in the short run.

A firm in perfect competition has no control over the market place. Sometimes that price may be so low that a firm loses money no matter how much it produces. Such a firm can either continue to produce at a loss or temporarily shut down.

3. (The Short-Run Firm Supply Curve) Each of the following situations could exist for a firm in the short…show more content…

This is very competitive to other firms in the industry.

5. (Long-Run Industry Supply) Why does the long-run industry supply curve for an increasing-cost industry slope upward? What causes the increasing costs in an increasing-cost industry?

Having a supply curve that slopes upward means the higher the price, the more suppliers are willing to supply the market. In the long run as price increases, more and more firms are willing to produce more product as Price is greater than Marginal cost. So the supply curve is upward sloping.

6. The National Council of Economic Education’s EconEdLink has an interesting module on the economics of Internet access at http://www.econedlink.org/lessons/index.cfm?lesson=NN10 Please review the materials provided. Is provision of Internet access a competitive industry? Briefly discuss.

Anything which has price is competitive. Firms attempt to take away business from competitors by reducing prices and/or providing better service so as to gain their business. In the internet business it is no different. If the internet service provider charge per minute, by the hour, by the week or month than there will invariably be a decrease in usage as the prices go up. However, when there is a flat rate across the board regardless of usage more and more people will simply use the services.

7. Commodities like gold often trade in markets that are examples of perfect competition. Think of a commodity

scantron (ECON 2302 Professor J. Bikis)
Please put your DBU ID number on the scantron in the area market "ID NUMBER"
Please write your webadvisonr id on the back of the scantron in the area marked "WEBADVISOR ID". (This ID is the same ID that you use to get into your DBU email or into BlackBoard)
Please select the best answer for each question given and fill in the respective answer option on the scantron for questions 1-40. Good luck!
1. Which of the following is not a positive economics statement…

city. Rents paid are a very high percent of peoples’ incomes. (a) Would the demand for apartments in this area be relatively inelastic or relatively elastic? State why. (b) Would the supply of apartments in this area be relatively inelastic or relatively elastic? State why.
1
(c) Draw the demand and supply curves as you have described them, showing the initial equilibrium price and quantity. Label carefully. (d) Now assume the government creates a rent supplement program. Under this program, the…

Supplement to Unit - II
BEHIND THE DEMAND CURVE: THE THEORY OF CONSUMER CHOICE
Here, the purpose is to explain the derivation of the demand function and to provide an understanding of the consumer decision-making process.
Consumer Preferences
Individuals make choices based on their personal tastes and preferences. Tastes and preferences are shaped by many factors. Some of the factors are family environment, physical condition, age, sex, education, religion, and location. In the analysis that…

rate of 3%?
Answer: P = $40/(0.05 - 0.03) = $40/0.02 = $2,000
Topic 2: Supply and Demand
1) Suppose that the demand for oranges increase. Explain the long -run effects of the guiding
function of price in this scenario.
Answer: In the long run, the higher price of oranges will signal more firms to enter the orange
market, as it will seem more profitable than some other markets. As firms enter, supply increases, causing the price to fall relative to the short-run price and quantity…

___________________ Date: __________
ID: B
Econ 2350 Midterm Exam, July 13th, 2010
True/False (total 20 points; 1 point per question) Indicate whether the statement is true or false. Please mark 0 for False and 1 for True. ____ ____ ____ ____ ____ 1. If the price of leeks falls by $2 per pound, then the demand for leeks will rise by 10 pounds. Therefore we can conclude that the demand for leeks is elastic. 2. Marginal revenue is equal to price if the demand curve is horizontal. 3. If there is a price…

1. Suppose there are 100 consumers with identical individual demand curves. When the price of a movie ticket is $8, the quantity demanded for each person is 5. When the price is $4, the quantity demanded for each person is 9. Assuming the law of demand holds, which of the following choices is the most likely quantity demanded in the market when the price is $6? Explain and show calculations,
While the question asks of the choices given what the quantity demanded will be, there are no choices…

per delivery of increasing output beyond 60 deliveries per day
A. is $0 because Owen does not have to purchase another van
B. is $5
C. is $75
D. cannot be calculated without knowing Owen's total fixed costs
14) Expected economic profit per unit is equal to
A. expected price
B. expected average total cost
C. the difference between expected average price and expected average total cost
D. the difference between expected total revenue and expected total cost…

Chapter 1: Page 20; Questions - 4, 7, 9, 10, 11
4) What are the key elements of the scientific method and how does this method relate to economic principles and laws?
The key elements of the scientific method are the observation of real world behavior and outcomes. Based on those observations, formulating a possible explanation of cause and effect which is a hypothesis. Next, testing this explanation by comparing the outcomes of specific events to the outcome predicted by the hypothesis. Then, accepting…